Short Sale Process Improved by Bank of America

Today, Bank of America Short Sale executives Bob Hora and Stephanie Lowe gave a one hour webinar to the real estate agents who do Short Sales with Bank of America. The most exciting improvement is that the structure of the review that delayed the processing in their former system has been removed.

Bank of America uses Equator to process Short Sales. The Equator system was originally developed to be the interface between real estate agents who handle bank owned properties (REOs) and the asset managers for the lenders who need to get these properties sold. The original name for the system was ReoTrans . This kind of work involves a series of sequential tasks where one task follows another and you have to work through them in order. For example, the agent would first go out to the property to determine its occupancy before changing the locks and cleaning it up.

Chris Saitta, CEO of Equator, is very cleaver. ReoTrans changed to Equator when the potential for Short Sales came up. Now, Equator processes three times as many Short Sales as REOs. However, the system for Short Sales was still sequential i.e. outdated because it was designed for REOs. For example, you had to upload certain documents and get the tasks associated with the Short Sale package complete before the negotiator could open the task for ordering the Broker Price Opinion (BPO) or appraisal to establish the value of the property.

The new improvements change the Equator system from being sequential to being simultaneous. The Bank of America reviewers can order the BPO early, so they can be working on the file while they wait the five to ten days that it takes to get the BPO done. I have had files where Bank of America erroneously closed the file, sending me back to square one. With the sequential system, you had to walk through all those steps in the same order so that the process could not be expedited. Now, you can do many steps at the same time. That was the good news.

The less than wonderful news is that there is a standard third party authorization i.e. the document that allows Bank of America to talk to someone other than the borrower. In the past, all the members of a Realtor’s team could be authorized to be in touch with Bank of America. Now, the only people who can be authorized are licensed real estate agents and attorneys. This will slow down the process, as an assistant cannot call the help desk to find out what to do about any of the odd things that Bank of America does. That call will have to wait until the Realtor is available to make it.

The new procedure states that there are five documents that must be submitted at the beginning of the process. These are (1) the Bank of America third party authorization form (2) the IRS form 4506T to get information on tax returns (3) the HUD-1 closing statement, typically for a closing that is 60 days out (4) the signed purchase contract including the Bank of America Buyer Acknowledgement & Disclosure form and (5) the Bank of Aamerica Short Sale Purchase Contract Addendum. Since many of these are Bank of America forms, smart listing agents will upload those forms to the MLS with their listings, so any buyer making an offer will also sign the required forms.

The transition to this new system will happen on Friday the Thirteenth of April. If you have a Short Sale open with Bank of America, you need to have certain tasks complete. If you have a task to (1) submit short sale offer (2) upload the offer or (3) upload supporting documents, you have to complete that task by April 13. Otherwise, you will have an abundance of tasks to re-do and you risk having Bank of America close your file if there has not been any activity for a while.

I found it interesting that the real estate agents are supposed to comply with this new system by April 13. There is going to be training on how to comply with it on April 19th. Don’t you think the training should come before the compliance date?

The webinar discussed how to get the attention of your negotiator to straighten out problems. All of the communication has to go through the Message system in Equator. The justification is that it would keep the confidential information protected, so that sensative information would not be emailed. To the uninitiated, that sounds like a good idea because it is more secure and it leaves a record of the communication. However, Bank of America outsources many of its Short Sales to AMS, LRC and REDC. If the file is assigned to any of these outsourcers, the message system does not work. You enter a new message, hit send, and an error message shows up in your email telling you to call the outsource company. I sent two questions pointing this out during the webinar, one with the contact information for the Equator VP who is working on this problem, but there was no response.

The way the communication system is supposed to work is that you contact your negotiator through the Equator Message system. They have two business days to respond. If that does not work, you contact the team lead through the same system. Again, the response is supposed to occur in two business days. Stephanie Lowe said that they monitor this preformance, and their negotiators complinance is in the range of 87% to 93%. If the problem is not resolved, you contact the Short Sale Customer Care center at 866-880-1232 and the 800+ people who work there are supposed to straighten it out. I applaud the idea, but I have made many calls to the Customer Care center. The most frequent response is an appology that things went wrong followed by an explanation that they are powerless to fix it.

If you have a problem with one of the files that are outsourced to AMS, LRC or REDC, the system to resolve the issue is to complain to the outsource negotiator. If that does not resolve it, complain to the Customer Care center. If that does not resolve it, go back to the Customer Care center and they will put you into he Bank of America escalation system. Again, an appealing idea, but I have gone through that system with the only result being that an incorrectly closed file could not be re-opened, so I had to go back to square one.

There were a lot of questions about Bank of America referring Short Sales to real estate agents, similar to how they send their REOs to certain Realtors. Bob Hora said they would not be doing that. However, they are going to have a system where a borrower can look up a Short Sale agent in their area who has experience getting Short Sales approved with Bank of America. In other words, if you are an agent with a good track record on Equator with Bank of America Short Sales, you will be put into this system where a borrower can find you by putting in their address. Mr. Hora had to emphasize that this does not constitute an endorsement by Bank of America.

Bob Hora went over the leading reasons why Short Sales do not succeed. There were three leaders, each with about 15% of the failures. The buyer walks away. This is normally a function of how long the review takes, so the new expedited procedure should help that. The second reason is that Bank of America does not get the required documents. This is normally a situation where the investor gets picky e.g. the seller has most of his documents showing the first, middle and last names and some of the documents are only first and last name. The third reason is that the investor refuses to postpone the foreclosure sale. There are legendary stories about Bank of America giving a Short Sale approval and saying the buyer has to close the next day to beat the foreclosure sale. The faster system and standard documents should help the first two issues, so that there will be less times when a foreclosure postponement is necessary.

Stephanie Lowe answered a question about disputes over values i.e. the Broker Price Opinion (BPO) is wrong. She said the real estate agent can upload their own BPO or comps to dispute the value. If the property has repair issues, repair bids can be provided by the real estate agent. One interesting point is that they did not want an appraisal done by the buyer, claiming that Bank of America can only consider a value done by an unbiased third party. However, Ms. Lowe said you could upload the comps used by that appraiser to show that the valuation was wrong.

I appreciate all the effort to expedite the process, educate the real estate agents and provide online resources. Bank of America has come a long way. I enjoyed a comment by one of their executives at a recent conference that when you start from that far behind, you can improve dramatically. I think is comment was humorous, but they appear to be making more effort than any of the other lenders. I hope the new system works as well as expected.

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Comments

There are a ton of variables that come into play that can affect the outcome of your short sale. The best advice I can give any homeowner is to do your research and take the time to find a well educated agent like Tim Burrell, securing a knowledgeable agent will help a lot. Simply due to the fact that they?re time consuming and they?re able to assist more homeowners this way.

I read your article with particular interest as it relates to my own personal short sale experience with Bank of America. The initial HAFA short sale request was made in Dec. 2011 and we are now at mid June 2012 and still waiting for answers from negotiatators and closing officers who do not respond for WEEKS at a time. So many excuses and such a lack of communication.

The buyers are ready to walk on this deal. We have exhausted their patience and endurance. At this point, we have met the investor’s bottom line, we are ready to close, the buyer’s lock is expiring, and we are waiting and waiting and waiting for the approval letter.

No one takes responsibility, customer service is kind but their hands are completely tied. They don’t even know who Bob Hora is. What a fiasco! I will certainly go out of my way to avoid doing business with Bank of America again in any way.

Bank of America still has much to do to improve the short sale process. Negotiators still do not respond to agent requests in the required two-day time frame. Team leaders do not respond either. Customer Service reps, who are the bottom rung on the ladder, are powerless. Bank of America’s communication to agents on Equator is often ambiguous, lacking in detail, or just plain gibberish. How is this an improved system?

You are right that they still have a long way to go. However, did you work with them a couple of years ago? They are much better than that, but still need much improvement. Your point about Equator communication is correct. I have had messages that say to upload Misc. with no further information. Also, the emails from Equator merely tell you that there is a message on one of your short sales, with no further information. So, you have to check them all. Also, your point on their communication is well taken. If you do not get a response within the 48 hours, call the Short Sale Help Desk and escalate the issue. Sometimes they are helpless (like when they erroneously close your file), but others can help to move it along. You want to get escalated to the Presidential Escalation team and it will move along better. However, even that group has issues, like the sale they said would be approved in two weeks and that was about a month ago. Thank you for your message, you made good points.

I am employee of the bank and have been attmepting to compete my short sale with them since January. We are will into 7 months since I started and the same reponse is given: “Sorry, your loan was transferred to another negotiator. We will have it submitted to the investor for approval right way.” 4 negotiators later and they they admit it just keeps getting pushed aside without an exact reason. No one is actively working the file and there is nothing I can do about it – and I am at the bank everyday. At one time I was told my file started prior to this April initiative to speed things up, so I missed the fast processing. What?! The bank has since filed foreclosure which means if it goes that route they are due to receive less money than what a short sale would provide. How the stock price is anywhere close to $8 is beyond me.

If you?re facing extreme financial hardship and it looks like your home might be foreclosed on, a short sale can be a way to minimize your losses. As you enter the process, remember that each step carries some uncertainty. Just because you begin working with a lender on the short sale package doesn?t mean you?re in the clear. Be patient and flexible, understanding that the short sale could fall apart.Short sales are complex, and whether you?re considering buying a short sale or selling your home as one, you need to talk to someone with expertise. Finding a reputable real estate agent like Tim Burrel to work with will make it as effortless as possible. They are knowledgeable and familiar with the intricacies of the short sale process and can surely help and protect your best interest at heart.

I think BOA is the most unorganized company I have ever delt with. I am a BUYER AND AN APPROVED ONE AT THAT! We came in on the tail end of a deal falling apart, met the price that BOA said they would except that was August 24, 2012. The seller excepted our contract. 6 weeks later the “BANK” said the file was too big.. and needed to start over REALLY!. Throw the other “shit out” take the offer that is no the table. It’s the same, we have financing, we have proved we have 20% down and yet my whole house has gone into storage because BOA is worthless. I finally called today since the realtor is not getting anywhere with this so called equartor system that is place. I think BOA wants the house to be forclosed on or they would take care of this issue.. What a joke.

I feel your pain. Bank of America has a “soft decline” procedure that allows your new offer to be submitted more quickly. Equator has the offer coded to the name of the buyer, so you cannot just change the buyer, you have to decline the one file and change it to your new offer. I hope it works out.

I want to know about short sales buyers and what can they do when they did everything, still waiting for a closing date that keeps been push now with a tentative date and the homeowners taking the fixtures of the house !! even the trees when only they said were going to take only 2 things and is in the contract.The owners realtor doesnt care ,the locks are the same.what can the buyers do????????????????????????with who you need to talk?

Your agent should be able to help. The contract says they are supposed to leave the fixtures and if they take them, you do not have to buy the property. So, if the sellers want the benefit of the short sale, they may come to their senses and put the items back. If it is a HAFA short sale (or one with incentives to the seller) those incentives can be used for repairs i.e. to replace the things they took. That would allow the replacement to be paid for out of the funds at closing. Good luck.

Tim I am a Realtor who is the listing and selling agent of a BOA short sale. The condo had 3 offers on it. It was listed at 114 in June, 2012. 1st offer 105–didn’t pan out lack of funds 2nd offer 110(buyer had another listing agent) fell through. While we had an active 2nd contract I received a call from a person living in the complex interestedd in the condo. I told her it was under contract but if the contract fell trhough I would call her. 2nd contract fell through. I called her and we executed a 3rd contract August 3rd @105,000. The appraisal came back fine. I did not put the listing back in MLX because we had the backup. The short sale and hafta was approved for a 2/12/13 closing(in writing). On 2/11 I received a call from the title company that is handling the short sale through Equator. I immediately furnished the title company with a time line of the different transactions and the backup documentation. Equator had called for a history of MLX listing on 1/24. My understanding verbal–not written is that the approval was pulled because the offer not “smell” right. I am gathering because it was not put back into MLX after the 2nd contract fell(not required by our association) through and the $105,000 amount.
My understanding now is that the bank can pull the approval for any reason with no thought to the buyer, seller or Realtor or no chance to rectify whatever the powers that be think is wrong with the file. The rep from the title company and their attorney has spoken to a VP of BOA concerning this situation to no avail. If you could offer any advice it would be greatly appreicated.

Bank of America requires that all short sale properties be put in the MLS. Even after there is an offer on the property Bank of America wants the property to be still shown in the MLS. In their original email, they said the property had to be Active, which was misunderstood. They clarified their message with a follow up email to say that it had to be in the MLS but could be shown as Contingent, Back Up or Pending depending on what the rules of your MLS require for properties where they have a contract being considered. Your problem is that the property was not being actively marketed in the MLS, so they get the impression that they are getting an offer that is for less than market value because the property was not available to be seen by other buyers. In other words, they want competition for the short sale to drive the price up to a reasonable value. You might try re-submitting the short sale after you put the property back in the MLS and see what happens. Also, call the Help Desk at Bank of America at 866-880-1232 to see if they can give you any help. In the future, never take a Bank of America short sale property out of the MLS until it closes.

You have a good point, you need to know the regulations for your own MLS and comply with them. The regulations for my MLS have changed since that post was written, so that I have to show the property as Contingent when the seller signs a contract. Thank you for pointing this out.

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